First Point Group – Finance Brokers & Consultants
Finance / Home Loan Market Update
Big Changes to Investment Property Loans
There have been some big changes in the past few weeks for investment property loans. The Australian Prudential Regulation Authority (APRA) has been talking to all banks / lenders in the market since 2014 regarding the fact that they have been lending more money to “property investors” than to “owner occupiers”.
In 2012, Owner Occupied loans represented around 60% of all new Home Loans funded in the Australian market, however, the trend since 2012 has steadily moved towards investment loans now accounting for around 58% of total new Home Loan transactions. APRA sees this as a possible concern and has been working with the banks to place a “cap” on investment loan transactions. If the trend continues to be weighted towards investors, any type of property market correction could possibly have a magnified effect, as generally speaking, property owners are more likely to sell their investment properties than their own homes. In a worst case scenario, this could drive property values down too far, creating a situation where debt exceeds property value.